The company announced it sold 1.7 million Xbox 360 units in November. That's including a huge week after the U.S. Thanksgiving holiday, when Microsoft sold more than 1 million consoles.

It has the largest market share of any console at 49 percent and has been the top-selling console for nearly a year straight.

Microsoft has a chance to catch Apple and Google unprepared with its new focus on the living room. It's powered by Kinect — which is only one of the best-selling consumer device of all time. Instead of using a low-tech crappy remote control, it's powered by Minority Report-style hand gestures and your voice. Wave your hand to the right to swap to another menu, or tell the Xbox to search for a movie.

You'll still need a subscription to watch TV content, but eventually it could evolve into a full replacement for your TV set top box, if Microsoft can keep expanding the amount of content available.